No move to raise cap in insuranceNew Delhi, March 9
Finance Minister Yashwant Sinha today denied that there was any proposal to increase limit of foreign equity from the existing cap of 26 per cent in the insurance sector.

Markfed accounts ‘suspect’Chandigarh, March 9The financial health of Punjab Markfed, Asia’s biggest co-operative venture, is failing. Not many are inclined to appreciate that the main reason is that its accounts and financial statements are fudged. Hence, suspect. These do not reflect true and fair picture, says the latest audit report (2000-01).

LIC Hous Fin posts 80 pc growthChandigarh, March 9
Mr D. Krishnan, General Manager, (Marketing), LIC Housing Finance Corporation, said that the housing finance which was mainly the domain of couple of housing finance companies till three years back now become a competitive field with a number of players, including banks, jumping in the fray.

In the wonderland of investment
Q: I seek your advice on the recently introduced Index Funds being recommended as a wayout of the current poor performances of equity and debt based funds.

RENT CASES

Registered consumerQ: Whether liability can be fastened on the landlord who was neither a registered consumer nor an actual user of electricity?

Aviation industry stabilisingMINISTER for Civil Aviation Shahnawaz Hussain is optimistic that the aviation industry is on a high road to stabilising. “Post-September 11, we have had a lot of problems but we have withstood the pressures manfully”, said Mr Hussain in an informal discussion in his office.

ROUND-UP

Hudco housing loans at floating ratesNew Delhi, March 9The Housing and Urban Development Corporation (Hudco) today announced individual housing loans at floating interest rates of 11 per cent to 11.5 per cent, and said it would expand its retail outlets to meet the demand for loans.

New Delhi, March 9
Finance Minister Yashwant Sinha today denied that there was any proposal to increase limit of foreign equity from the existing cap of 26 per cent in the insurance sector.

“There is no question of the cap being raised in insurance. It is bound by the law passed in Parliament,” Sinha told newspersons on sidelines of seminar on globalisation organised by the Delhi-based Association of Social and Economic Transformation here.

Under the existing norms as specified by the Insurance Regulatory and Development Authority (IRDA) Act, a maximum equity participation of 26 per cent is allowed for foreign players.

He also said he would discuss the issue of rolling back of LPG and kerosene prices with Atal Behari Vajpayee.

Earlier speaking at the
conference, Mr Sinha said India would tread cautiously on the front of capital account convertibility as free flight of capital had the potential of destroying of economic stability.

“We have to guard against an international tornado hitting us,” Mr Sinha said.

Citing the instance of Brazil he said the country, despite having a comfortable
foreign exchange reserves of $ 75 billion had to undergo a major capital crisis as their was full convertibility on the capital account.

He said $ 130 to $ 135 billion were given by the IMF to bail out the East Asian nations during the economic meltdown, with each of the countries getting a package of about $ 30 to $ 35 billion.

Since globalisation was inevitable it was important to prepare for it.

Expressing concern over the burgeoning fiscal deficit, Mr Sinha said, “A large fiscal deficit has the problem of spilling over to the external sector and create a balance of payment crisis.

The largest import bill is in petroleum products, which has the potential of destabilising the economy,” he said.

“While poverty elimination will be our main goal, we must manage our affairs and also learn to make sacrifices. Those who do not learn to make sacrifices will be heading towards the doors of the IMF.”

Touching upon global terrorism, the Finance Minister said the USA was maintaining double standards in dealing with global terrorism.

New Delhi
The government today ruled out any relaxation on interim dividend norms and assured small investors that there would be no
harassment in the process of dividend tax collection.

“There will be no relaxation,” Sinha told reporters here when asked about the minimum notice period for announcing a interim dividend as laid down in Listing Agreements of SEBI.

Coming down heavily on corporates for trying to circumvent law to avoid dividend tax, Sinha said “again they have come out in very poor light that they declared such huge dividends.”

“What is the meaning of this? May be they won’t declare any dividend in the next four years,” he said on the sidelines of a seminar on globalisation here.

Sinha also assured that there would be no
harassment to small investors as the tax department would not ask for any TDS (tax deduction at source) certificate after they get the dividends from the companies and mutual funds.
PTI

Chandigarh, March 9
An agreement for scientific research and exchange of information in the agricultural field will soon materialise between South Africa and Punjab. The agreement would give the state an opportunity to study the highly developed farming sector of Africa that uses latest technology for food processing and agro related activities, disclosed Ms Maite E Nkoana, High Commissioner of South Africa in India, while talking to The Tribune here today.

She said the Chief Minister of Limpopo province will visit India by the end of this year following which the agreement is likely to take place between the two countries. “We are also expecting collaborations in food processing and preservation”, she said, adding, “agricultural research for wheat, maize and tomatoes would immensely benefit India”.

India is one of the top 10 trading partners of South Africa and promotion of bilateral trade, exchange of information between the two countries would go a long way in promoting development, she said.

Apart from agriculture, South Africa might soon send their expert coaches in football to India and in turn, derive benefit from the expertise of the Indian cricket coaches there, said Ms Nkoana.

She said the businessmen in India can look forward to explore opportunities in the fields of jewellery manufacturing, mining and electricity. “We are currently producing electricity at as low as 50 paise per unit”, she informed.

Regarding, investment opportunities there, she said special advantage can be availed by going in for any of the 11,000 products, which according to an agreement on trade, development and co-operation , can be exported from South Africa to the European Union (EU) duty free.

Elaborating further, she said that South Africa has developed leading technologies and skills across numerous industry sectors particularly in the fields of energy and fuels, steel production, deep-level mining, telecommunications and IT. “We are internationally renowned for abundance of mineral resources and hold world’s largest reserves of gold, platinum group metals and manganese ore among other minerals. A host of mega mineral beneficiation projects are aimed at exploiting the potential of the natural resources we possess”.

The Spatial Development Initiative (SDI) programme which is a short term investment strategy facilitating economic growth and sustainable job creation in the industry there lays strong emphasis on co-operation and diversification of ownership through development of small, medium and micro enterprises. The current portfolio of SDIs has identified nearly 800 investment opportunities with value of US $32.4 billion , she said.

The northern part of India can especially look forward to gaining advantage from South Africa’s automotive sector, said Ms Nkoana.

Chandigarh, March 9
The financial health of Punjab Markfed, Asia’s biggest co-operative venture, is failing. Not many are inclined to appreciate that the main reason is that its accounts and financial statements are fudged. Hence, suspect. These do not reflect true and fair picture, says the latest audit report (2000-01).

Markfed is among 39 public sector undertakings and co-operative apex institutions in which the total state equity is Rs 3,569.80 crore, (March 31, 2001). Surprisingly, its “shady” deals and operations do not find even passing reference in the memorandum on the financial position submitted to the Council of ministers on March 6.

While the audit report reflects huge losses, Markfed’s financial returns with the audit indicate a profit of Rs 3.65 crore (2000-01).This profitability is based on accrual receipts and not actual receipts. Over the years, no effort was ever made to adjust these receipts. Markfed profit of Rs 204.07 crore (March 31, 2001) is based on anticipated revenue of carry-over charges of wheat. The operational losses of paddy are Rs 44.76 crore.

The audit, it is learnt, attributes the huge losses to “negligence” of officials concerned. Name any activity—procurement, storage, sale of wheat/ paddy, setting up of rice mills, inviting tenders, disbursement of bonus/ ‘shukrana’ to employees, shortages due to theft, pilferage or damage—and Markfed has ‘distinguished’ itself.

The audit report says, there is misappropriation of paddy stock to the tune of Rs 72.29 crore (1994-95-1999-2000), embezzlement of Rs 8.69 crore in fertilizer stock (1980-81-1999-2000), loss of Rs 3.69 crore because the rice mill owners have not paid their dues (this old outstanding amount is “doubtful”) and loss of Rs 1.35 crore due to sale of damaged paddy.

Markfed has a wheat stock of Rs 4,000 crore. It has paid Rs 344.90 crore interest on cash credit limit it availed of. The interest liability will further increase, if stocks are not liquidated soon, while, new wheat arrivals are at the door-step. The books of accounts have not adjusted losses of over Rs 130 crore of the previous year.

The real import of why and how Markfed incurs losses comes from the audit observations on six modern rice mills, involving Korean machinery. All these are running in losses but profits have been shown by
transferring their losses to paddy procurement operations.

The previous Managing Director, Mr D.S. Bains, it is learnt, did not show the auditors relevant papers, including tenders (not global) floated for machinery required for the six rice mills. The lowest bid reported was Rs 80 lakh. But installation of each mill cost up to Rs 3 crore. The machinery was imported through a Panchkula-based private agency.

The audit has, reportedly, now submitted a ‘special report’ on these six modern rice mills involving Korean machinery, to the new Managing Director, Mr S.S. Channy, pointing to Rs 20 crore goof-up.

Despite suffering a loss of Rs 56.96 crore (1995-96), Markfed had the audacity to disburse Rs 3 crore as bonus/‘shukrana’ to its employees without the approval of the Registrar, Co-operative Societies, says the audit report. On its recommendation, recovery is being effected.

Chandigarh, March 9
Mr D. Krishnan, General Manager, (Marketing), LIC Housing Finance Corporation, said that the housing finance which was mainly the domain of couple of housing finance companies till three years back now become a competitive field with a number of players, including banks, jumping in the fray.

Mr Krishnan said that Government of India has declared housing as a priority sector. The allocation of the Ninth Five Year Plan to the housing sector is to the tune of Rs 1,500,000 of which Rs 1,55,000 million is to be contributed by housing finance companies.

The government has also announced a number of taxation benefits for the construction companies in corporate taxation and for individuals availing housing loans under section 24(i) relating to interest to the tune of Rs 1,50,000 and Rs 20,000 under section 88. In view of the taxation benefits an individual can save over Rs 50,000 as tax, he added.

LIC Housing has been showing an excellent growth rate of over 30 per cent. The company has recently introduced the floating rate of interest of 11.5 per cent.

Mr S.M. Manjeet Kaur Sawhney, Area Manager Chandigarh, detailed the performance of Chandigarh Area office which has already achieve 106 per cent of the Budgeted Target for the current financial year and is showing a growth rate over 80 per cent.

Q: I seek your advice on the recently introduced Index Funds being recommended as a wayout of the current poor performances of equity and debt based funds. Also I note most of the articles opine that equity funds hold promise in a long run of 3-5 yrs. As an investor having made beginning with mutual funds through SIP (Systematic Investment Plan) in the early 1999, should I hold on to my equity based investments (Birla Advantage, Zurich Top 200, Templeton India Growth Fund, Alliance 95, etc.) till end of 2003?

M.P. Prasad

A: Index Funds give a very wide spread and, therefore, are less volatile than individual scrips. Yes, the share market has become recently bullish and this may be the right time to enter into Index. However, I personally do not recommend any equity-based schemes. The debt-based schemes of the same MFs allow me to count chicken before they are hatched.

Birla Advantage, Alliance 95, etc., are very nearly Index funds. You must have taken a bad beating by choosing to enter when the market was on a rampage. Hold on these but come out by choosing the exit date properly. There is no need to wait until 2003.

However, if you have opted for SIP in these schemes, switch over to pure-growth option. I would not like you to increase your exposure further to equities.

Q: I was working in district co-operative bank. I accepted VRS in September 1994 and got ex-gratia payment Rs 2,73,000 (28-month salary in advance that is one month salary for each year service rendered) at that time employer didn’t deduct DTS. I didn’t submit my income return for financial year 1994-95 and there on 1. Can income tax department recover tax from me directly? 2. Who is responsible for TDS whether bank or me? 3. What measures are there in act to reduce liabilities for tax to me?

Prem Singh

A: The fact that it is the responsibility of the employer to apply TDS on salary paid to the employee (VRS is part of the salary) does not absolve the employee from filing the returns. Most of the employees are ignorant of this condition and do not file returns. The department has unlimited powers to recover tax. In your case, the employer possibly did not apply TDS because the VRS amount paid to you was tax-free.

The measure to save tax liability is not a thumb rule. It would depend upon several factors associated with you and your family members and also your future needs.

Kindly frame your query properly. Investment is an important aspect and do not treat it casually. Moreover, realise that your query may get published if I find that the query would be useful to my readers.

Q: LIC’s new Jeevan Dhara. As you would be aware LIC is closing the policy with its current features on Dec 24, 2001. In this policy there is an option for the policy holder to get notional cash option (instead of normal annuity) at the end of deferment period minimum 10 yrs), my question is whether this amount is taxable, if so as normal income in the year of withdrawal or as capital gains (as one development officer has sought to explain to me, though I am not fully convinced with his reply). If is tax free in the year of withdrawal then surely this investment with 11.28 per cent return must rank as the No. one investment and tax saving device.

Manish Kaura

A: Sec 88 (2ii) states that the rebate is available on any sums paid or deposited in the previous year by the assessee out of his income chargeable to tax to effect or keep in force a contract for a deferred annuity on the life of a person provided — and this is important — that such contracts do not contain a provision for the exercise by the insured of an option to receive a cash payment in lieu of the payment of the annuity.

The New Jeevan Dhara has incorporated in it a cash option where the deferment period is 10 years or more. Consequently, Sec 88 rebate is available on policies having deferment of nine years or less.

The annuity and the cash option is always taxable.

Q: 1. My MIP 97 is maturing in April 2002. As per offer terms, I hope to receive the invested amount from UTI in full. 2. Can I avail of indexation benefit and thus claim long-term capital loss? I feel yes, as the returns have been tax free, as in the case of company dividends. It is not so in case of debentures or Co-FDs. — M.K. Jain

A:
1. I also hope so.

2. You can claim the benefits of long-term capital gains and option to use indexation is available. This is not because the dividend from MFs is tax-free. It is FA99 that made this dividend tax-free. The possibility of claiming long-term capital loss exist ever since the concept of indexation of cost was introduced by FA92.

I have an interesting observation to make. As per its definition, when a ‘financial asset’ is “transferred”, the surplus or deficit is treated as capital gain or loss. Earlier, regular income-paying avenues like bank deposits, NSCs, Co-FDs, etc., posed no problem since at their maturity there was no surplus or deficit. Now, with the introduction of indexed cost, If I am allowed to go strictly by the letter of the law, I can claim substantial long-term capital loss even on such instruments! This is illogical.

Petitioner claims that it purchased the property but could not get immediate possession from the two tenants since they had unauthorisedly transferred the possession in favour of a third person. Perforce it had to accept the attornment of the said third person as a tenant. In that event, he had successfully filed a suit for eviction and obtained the possession of the disputed premises.

On that day, however, there was no electricity connection and hence had to apply for one. But instead he was served with a demand notice for arrears of electricity. Electricity connection, against which arrears were claimed, were in the name of the earlier two tenants.

If they were the registered consumers, a privity of contract was between the Electricity Co. and those two tenants i.e. the registered consumers who were also the actual users of the electricity. On these facts, it is not open to the Electricity Co. to fasten the liability of arrears on the petitioner — a new owner of the premises, who was neither the registered consumer nor the actual user of electricity. This view of the H.C. was supported by the decision of the Bombay. C. in Fatechand Murlidhar v Maharashtra State Electricity Board, Nagpur (A.I.R. 1985 Bombay 71).

It was pointed out to the HC that the Electricity Co. has also filed a suit for recovery of the outstanding amount against the registered users. Vide an interim order dated 18.12.97 in the preset W.P., the operation of the impugned demand letter was stayed. Vide another order dated 13-4-1998, the Electricity Co. was directed not to withhold the grant of permanent electricity connection to the petitioner on account of the impugned demand.

Consequently, the H.C. allowed the present writ petition. A writ of prohibition shall ensue, restraining the respondents — Electricity Co. from recovering the impugned demand from the petitioner. Further, it ordered the electricity connection shall be granted to the petitioner, if otherwise found eligible.

MINISTER for Civil Aviation Shahnawaz Hussain is optimistic that the aviation industry is on a high road to stabilising. “Post-September 11, we have had a lot of problems but we have withstood the pressures manfully”, said Mr Hussain in an informal discussion in his office.

According to Mr
Hussain, there will shortly be new Managing Director for Air India. “We have already had a new aviation secretary and we will soon have incumbents in the Directorate-General of Civil Aviation
(DGCA) and the Airports Authority of India (AAI)”, said the minister.

When asked his plans about utilisation of Safdurjung Airport where flying has been discontinued owing to security reasons, Mr Hussain said: “Discussions are on as to how it should be made use of without affecting the security”.

The investigations are in progress to determine as to what exactly went wrong when the helicopter carrying Lok Sabha Speaker Balayogi and two others crashed recently. The DGCA authorities have examined the chopper crash site and have also examined other aspects. But the experts believe that not much will be revealed.

Time and again it has been voiced that there is an acute paucity in wherewithal and infrastructure to small aircraft, operated by business houses.

The fact is that these private units, for their own benefits and considerations, provide aircraft to bigwigs and politicians, for official and unofficial assignments, only to run into serious problems in mid-air.

It was only late last year that Madhavrao Scindia and six others perished in the crashed.

The DGCA will have to fix strict rules and regulations so that the aviation scenario wears a rosier picture than it has projected in the recent years.

What is worse is that pilots, involved in major accidents, go scot free because they have contacts with politicians and bureaucrats while pilots involved in minor incidents are taken to task.

History reveals that the authorities have been following two sets of rules in awarding punishment. One rule is for favourites and another for those who have no god-father.

ROUND-UP

Hudco housing loans at floating rates

New Delhi, March 9
The Housing and Urban Development Corporation (Hudco) today announced individual housing loans at floating interest rates of 11 per cent to 11.5 per cent, and said it would expand its retail outlets to meet the demand for loans.

Hudco Chairman V. Suresh told reporters here that the loans would be offered from March 10 at floating rates of 11 per cent for repayment up to five years, 11.25 per cent for six to 10 years and 11.5 per cent for all loans above 10 years. The interest rate would be adjusted every six months (1st April and 1st October) and calculated on monthly rent basis.
PTI

HDFC Bank at Zirakpur

Chandigarh
HDFC Bank set up its 153rd branch at Zirakpur today. it was inaugurated by
Mr K.R. Lakhanpal, principal Secretary (Finance), Punjab. The branch is located along the Chandigarh-Derabassi Road.

Speaking on the occasion, Mrs Neena Singh, Regional Business Manager, said the bank provided an accessible branch network across 66 cities which enabled it to promote economy. Mr Jasjeet S. katial, Branch Manager, said the latest technology enabled customers to have convenient banking experience at one-stop-window.
TNS

Cooperation with Limpopo stressed

Chandigarh
Business relations between India and Limpopo province of South Africa can grow by leaps and bounds and the opportunities that can emerge by enhancing mutual cooperation are immense, said Ms M.R. Semenya, Minister for Arts, Culture and Sports, Limpopo Province, addressing an interactive session organised by the PHDCCI, here today.

Highlighting the features of Limpopo province, she said the province was rich in natural resources and mining is the main business apart from agriculture there.

Ms Maite E Nkoana, High Commissioner of South Africa in India, said Limpopo has its strength in the areas like mining , agriculture and tourism . Being rich in minerals, the province contributes to half of the coal production of South Africa and is abundant in gold , diamonds and now in platinum.
TNS

Spice
Chandigarh, March 9
Spice Telecom today announced a reduction of 70 per cent in the airtime charges on its roaming facility. With this the Spice subscribers can avail roaming facility at Rs 3 per minute against Rs 10 charged earlier. The post-paid subscribers can subscribe to north roaming and / or national roaming on a refundable roaming deposit of Rs 1,000 or Rs 1,500,
respectively, stated a company press release. TNS

Kamdhenu Ispat
Chandigarh, March 9
Kamdhenu Ispat (KIL) has established German Evcon Technology-based international standard steel manufacturing plant in Punjab. The plant situated at Mandi Gobindgarh will be inaugurated tomorrow.
TNS

Steel industry
Mandi Gobindgarh, March 9
The violence in Gujarat has badly affected the steel markets of Mandi Gobindgarh and other steel industry of Punjab. The transportation of ship breaking raw material from Bhavnagar to Punjab and supply of finished steel goods to Gujarat have been hit hard due to slowdown of truck carriers.
OC